Michael Kidron

Imperialism – Highest Stage but One

(Summer 1962)

First published in International Socialism (1st series), No.9, Summer 1962.
Republished in International Socialism (1st series), No.61, June 1973.
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Fate was unkind to Lenin when it singled out his pamphlet, Imperialism, The Highest Stage of Capitalism, to be the most pervasive of his writings. The warning implied in its subtitle – “A Popular Outline” – and made explicit in the original preface – “these cramped passages ... crushed in an iron vice, distorted on account of the censor”; the narrowly-conceived objective “to present ... a general picture of the world capitalist system in its international relationship at the beginning of the twentieth century ...” [1]; the fact that the pamphlet was purpose-written to explain the causes of World War I, then at its height – have all been lost sight of in an uncritical, almost universal, acceptance of its central themes. This is all the more strange since much of what he analysed has clearly either gone or become much less important than in his day.

In broadest outline, Lenin’s thesis was that capitalism’s maturity compels it to export capital on a large scale and that its internal organization facilitated the process. The drive to export capital resulted in a carve-up of the world financially between cartels and territorially between empires, and the profits accruing therefrom provided the wherewithal to bribe a thin upper-crust of workers into acquiescence with reformism at home and with imperialism abroad.

There are at least four issues here. First, how relevant is Lenin’s portrait of capitalism to-day? Second, is reformism necessarily tied to empire? Third – a problem which moved from the wings only after the decline of classic Marxism – how has the flow and ebb of imperialism affected the development of backward countries and of the socialist movement within them? And fourth, does all this modify our view of internationalism? Since these are fundamental issues which require detailed treatment, I shall deal with only one, the first, here, leaving the others for later issues of International Socialism.

Monopoly

Lenin starts with the advanced stage of capitalist concentration in the industrial countries. “The transformation of competition into monopoly,” he writes, “is one of the most important-if not the most important-phenomena of modern capitalist economy ...” (p.15).

It was and still is. And since his day the process has gone on at an increasing rate. In post-war Britain, for example, expenditure on successful takeovers of firms big enough to be quoted on the stock exchange has risen from an average of £40 million a year between 1949 and 1952, to about £100 million yearly between 1953 and 1957 and up to £300 million yearly in 1959 and 1960. By then takeovers were more frequent than company flotations so that the number of companies fell by about 100 in each of the last two years. [2] Since 1962 the prospect of Britain joining the Common Market must have increased the number of mergers even more in line with what has occurred on the Continent. [3] And, as concentration had already gone a long way before this post-war spurt [4], it must have reached phenomenal proportions by now.

“Finance Capital”

Lenin goes on to show that concentration in industry was paralleled by a similar movement in banking to such effect that the banks in practice gained control of commerce and industry. In extenso: “When carrying the current accounts of a few capitalists, the banks, as it were, transact a purely technical and exclusively auxiliary operation. When, however, these operations grow to enormous dimensions we find that a handful of monopolists control all the operations, both commercial and industrial, of capitalist society. They can, by means of their banking connexions, by running current accounts and transacting other financial operations, first ascertain exactly the position of the various capitalists, then control them, influence them by restricting or enlarging, facilitating or hindering their credits, and finally they can entirely determine their fate, determine their income, deprive them of capital, or, on the other hand, permit them to increase their capital rapidly and to enormous proportions etc.’ (p.31. Emphasis in the original).

The power of “finance capital”, i.e. “capital controlled by the banks and employed by the industrialists” (p.42) is so great “in all economic and international relations that it is capable of subordinating to itself, and actually does subordinate to itself, even states enjoying complete political independence.” (p.74).

These are large statements and quite a lot of time could be spent on examining whether they were entirely justified even fifty years ago. Whatever the case, they carry little conviction today as descriptions of the central institutional relationships within capitalist society.

Far from being dependent on banks and similar financial institutions, industrial firms are net suppliers of finance to other sectors of the economy. Between 1949 and 1953 they disposed of one-twentieth of their accumulations or savings in this way. [5] Nor are banks too eager to take on industrial financing. According to the Radcliffe Committee [6] “it is clear that their attitudes are changing,” and nevertheless they still hesitate to invest in industry except for very short periods of up to three months, and even then they do so to a limited extent: the eleven London Clearing Banks, the giants of the trade, held less than one-third of their assets in bills and advances to the private sector at the end of 1958 [7] and certainly not all of this was in favour of big industrial and commercial firms. Even life assurance and pension funds, although more involved in industrial financing, are hardly in it up to their necks as yet. Their industrial investments, broadly conceived, accounted for under 40 per cent of the total in 1957 and less than half of this was in ordinary stocks and shares – the true indicator of investment. [8]

Part of the difference between Lenin’s picture and the one given here stems from simple error on his part. Lenin was too impressed by conditions peculiar to Germany as documented at the time in Hilferding’s Das Finanzkapital, and overhasty in generalising from German evidence. It was true – it still is true to some extent – that German banks were heavily involved in industrial financing and that they wielded immense power over their clients. But German capitalism was a late developer. It found – as every backward country is finding today – that to break into the modern (in its case, British-controlled) market with backward (German) means it had to conserve every drop of saving and skill, even the very smallest, bring them together and invest them in plant bigger and better than that of their entrenched rivals. It had to make “combined development”, in Trotsky’s phrase, work in its favour. Since the banks were structured around this task and since the future of German capitalism hinged on its effective performance, it is not surprising that they became the key, controlling institutions within it.

British development was different as was, to a less extent, that of American or French capitalism. Here, the scale of investment was more or less geared to the scale of accumulation. Being in the vanguard of development, rich, powerful and with no felt need to make anachronistic means perform modern tasks, British capitalism left its banks to perform their original function of lubricating industry and trade, augmenting, marginally, resources raised elsewhere (through stock markets, internal accumulations and so on) and financing international commerce. Only in their international operations did British banks come anywhere near resembling their German counterparts – but of this later.

But error accounts for only a small part of the difference between Lenin’s picture and ours. Most of it is a true reflection of the changes that have occurred within capitalism itself.

Even in Britain, the banks were pretty powerful institutions at the beginning of the century, as anyone who dips into Feis’s classic can learn. [9] The, power was firmly based. Empire provided the British middle class with a relatively high income (see below) at the same time as it retarded the growth of British industry by providing it with a captive market. [10] Instead of being attracted towards industrial investment middle-class funds gravitated naturally towards the financial institutions (exchange banks, merchant banks, and so on) that straddled the capital-hungry backward countries and were – in the seven years preceding World War I – shunting well over half Britain’s annual accumulations abroad. [11] Since the existence of a captive colonial market also retarded the concentration of British industry and its organisation into gigantic units on the lines of the ones that were forming abroad, the city and its financial institutions stood out as the largest and, by reason of the international – therefore semi-political – nature of so much of its operations, the most self-conscious of capitalist institutions in the country.

But this was fifty years ago. Since then a number of things have occurred to reduce their relative stature. One is the very rapid growth that has occurred in industrial activity and in the largest industrial groups. Another is the emergence of the state as a decisive agent in the economy. Both have been touched on in a previous issue of this journal and need no repetition here. [12] Together they have shifted the locus of saving, the place where the decision to accumulate is taken – and the power to invest – to the industrial corporation and away from the financial institution.

This needs some explanation. So long as industry is expanding, as it was bound to under the stimulus of two wars, and is continuing to do under that of the permanent arms economy, company directors do their best to offset increasing taxation – itself a product of wars and the arms economy – by reducing payments to shareholders. As taxation rose from 14 to 39 per cent of net company income between 1938 and 1956, dividend and interest payments fell from 68 to 35 per cent. [13] Dividends as a percentage of profits have fallen drastically this century – from 67 per cent in 1912 [14] to an average no larger than 23 per cent in 1949-56. [15] They have even fallen absolutely in value – from £885 million in 1938 to £690 million in 1956 in pounds of constant purchasing power. [16] Middle class rentier incomes, i.e. incomes from property ownership, have thus fallen. At the same time, the incidence of personal taxation has encouraged them to view this development without alarm and to look to capital gains rather than income from dividends as their main source of unearned income.

But the banks have had to adapt. The flow of middle class savings which sustained their operations has been stemmed, or at least greatly reduced at source, while their control over industry and commerce has declined pari passu with the trend towards self-financing or financial near-autonomy in these sectors.

External factors have also clipped “finance capital’s” wings. Since the flow of private international capital has fallen drastically (see below) and public aid largely by-passes private banking channels; since, too, political independence in most of the world has broken up large currency areas into national fragments, each controlled to some degree by a Central Bank, the financial institutions which thrived above all on international operations have suffered [17] and been compelled in many cases to draw back. This change is nowhere more clearly shown than in the peculiar world of the City’s merchant banks, once the true buccaneers of Empire. As early as 1931 the Macmillan Committee suggested that these “foreign-orientated financial organizations concentrated in the City of London might with advantage be more closely co-ordinated with British industry”. [18] Default abroad coupled with rosier prospects at home have since amplified the message and there has been a marked shift towards domestic industrial banking. Close links have been forged with industrial groups as between Lazards and English Electric or Schroder and Pressed Steel. More typically, although more recently, this change in orientation has taken the form of amalgamation between old-established issuing houses “disproportionately strong in foreign business” and younger firms concentrating on “the home industrial financing which has been the mainstay of most firms which have expanded in recent years”. [19] In effect these amalgams have become managerial consultants, investment agents and brokers for the large industrial groups with which they are now associated.

Capital Export

Imperialism’s dynamic was the capital exports which “finance capital” encouraged and serviced. There is no quarrel here with Lenin. But, in his view, these capital exports were the prime index of modern capitalism. “Under the old type of capitalism,” he wrote, “when free competition prevailed, the export of goods was the most typical feature. Under modern capitalism, when monopolies prevail, the export of capital has become the typical feature” (p.56, emphasis in original).

It is here that we part. However true it might have been of modern capitalism as seen fifty years ago, the export of capital is no more its “typical feature” than “finance capital” its most developed form of organisation. On the contrary, the decline in the one has automatically dragged the other from its pre-eminence. Even in Britain, despite government measures designed to sustain the flow, even at the expense of growth at home; despite an accumulation of business ties and habits of generations; and despite a rate of flow – at £300 to £400 million a year in the 1950s [20] – that has scarcely ever been equalled [21], the significance of capital exports has declined tremendously: latterly they have run at about 2 per cent of gross national product compared with 8 per cent in the period before World War 1 [22]; they now absorb less than 10 per cent of savings compared with some 50 per cent before [23]; and returns on foreign investment have been running at slightly over 2 per cent of national income [24] compared with 4 per cent in the 1880s, 7 per cent in 1907 and 10 per cent in 1914. [25] Between 1895 and 1913, 61 per cent of all new capital issues were on overseas account [26]; by 1938 they were down to 30 per cent and more recently accounted for no more than 20 per cent of the total. [27]

For Lenin the importance of capital exports lay in their being able to alleviate, temporarily, some of the contradictions of mature capitalism. First, the world market could cushion “the uneven and spasmodic character of the development of individual enterprises, of individual branches of industry and individual countries (which) is inevitable under the capitalist system” (p.56). Second – and this is the fundamental argument – “The necessity of exporting capital arises from the fact that in a few countries capitalism has become ‘overripe’ and (owing to the backward state of agriculture and the impoverished state of the masses) capital cannot find profitable investment” (p.51). This argument explains why, according to Lenin, capital should, and did, flow towards backward countries. There would have been no logic in it flowing from one “over-ripe” economy to another. Moreover, the backward world offered singular attractions: “In these backward countries, profits usually arc high, for capital is scarce, the price of land is relatively low, wages are low, raw materials are cheap” (p.57).

The truth of Lenin’s reasoning stands or falls by his picture of capital flows: do they really shun developed countries and rush to backward ones? They do not. It is notoriously difficult to get hold of authoritative British figures but an official estimate puts private long-term investment (including reinvestment) in “less developed areas” in recent years at “something of the order of £100 million” a year or between one-quarter and one-third of total private investment abroad. [28] A similar, if less marked, bias towards developed countries is shown by US capital exports. Excluding reinvestments and stopping short before the flood of investments in the Common Market countries occurred (both of which would accentuate the bias) $5,238 million of private long-term capital or 54 per cent of the total outflow of $9,769 million went to “high-income countries” between 1953 and 1958 inclusive compared with $4,531 million to “low-income countries”. [29]

It is clear that current figures simply do not bear out Lenin’s thesis. Capital does not flow overwhelmingly from mature to developing capitalist countries. On the contrary, foreign investments are increasingly made as between developed countries themselves. And this is as it should be in all logic. For if we recall the reasons Lenin advances for the export of capital we shall find that they barely stand up to scrutiny in to-day’s conditions.

There is no point in debating the “cushion” argument at any length: however important backward countries were in absorbing the uncontrolled and disproportionate expansion of this or that industry or sector in the heyday of Britain’s industrial supremacy and classic laissez faire, they play little part in doing so to-day. Of the many factors in the change, political and tariff independence in most of the world spring to mind as the most obvious. But the most fundamental is the relatively high degree of planning achieved in mature capitalist countries, largely as a consequence of the permanent arms economy [30], which more or less contains the violence of sectoral expansion. The planned reduction in cotton textiles production in this country or the care with which US agricultural surpluses are disposed of in ways “not disruptive of normal trade channels” serve to illustrate the point.

Lenin’s second argument for the inevitability of capital exports – stagnation in mature capitalism – is equally difficult to sustain in the post-war period. Naturally Lenin could not have envisaged – no one in his day could conceivably have done so – the role of the permanent arms economy in stabilising mature capitalism, fixing it on a course of almost automatic growth and in transposing the locus of stagnation from mature capitalist countries to backward ones. But there it is, for one thing the major developed capitalist countries are growing at a faster rate than the major backward ones: between 1950 and 1959 percentage annual growth in the important developed countries was Japan 9.1, Germany 7.5, Italy 5.7, France 4.0, US 3.3 and Britain 2.5; for most important undeveloped ones it was Brazil 6, Congo 5, Indonesia 4, Egypt 3, India 3, Argentina 2. [31] Then again to assume (as Lenin did on the basis of a superficial measurement of railway mileage in a few colonial countries) that “the elementary conditions for industrial development have been created” is to assume away the “problems (crisis, agony etc.) of the undeveloped world” we hear so much about nowadays and to believe that the $4,000 million or so of aid and long-term loans pumped into them every year from all sources arise out of a spirit of philanthropy rather than from the (probably false) belief that political stability can be achieved if only the problem of industrialisation can be solved.

Lenin’s third reason for capital exports – the greater profits to be had in backward countries – can also be disputed. Since foreign investments are, as will be shown below, increasingly investments in manufacturing, and manufacturing techniques are increasingly standardised the world over, with a high and fairly fixed ratio of machines to workers, the difference in profit rates that derived from the different levels in wages in developed and backward countries has tended to narrow. There are many exceptions, some of them very significant, but this is no place for detail. Suffice it that while “current earnings on capital invested in United States manufacturing industry averaged between 15 and 20 per cent” [32] – “the income from the United States direct investments abroad, after taxes payable to foreign governments, has in the past few years been ... about 15 per cent.” [33] The return on US investments in countries other than Canada and Western Europe is put slightly higher – 17 per cent. [34]

Colonialism

The same unreality attaches – to-day – to Lenin’s coupling of capital exports with colonialism. Perhaps more stress ought to be laid on the interpolation “to-day”: physical seizure of backward areas by mature capitalist powers was so much the scheme of things at the turn of the century that there did not appear much reason to argue their connexion with capital exports. Nevertheless, he did advance – rather perfunctorily – two reasons for the connection.

One was that colonial possessions were invaluable as a haven for capital exports : “The necessity of exporting capital also serves to stimulate the quest for colonies, for it is easier in the colonial market (and sometimes it is the only possible way), by monopolist methods to eliminate competition, to make sure of orders, to strengthen the necessary ‘connections’, etc.” (p.77). The second and by far the more important in Lenin’s eyes was that colonial possessions vested control of essential raw materials in the possessor: “The more capitalism develops, the more the need for raw materials arises, the more bitter competition becomes, and the more feverishly the hunt for raw materials proceeds all over the world, the more desperate becomes the struggle for the acquisition of colonies” (p.75).

Lenin’s first argument is easily refuted. His own figures for French and German foreign investments so contradicted the thesis – more than two-thirds the French total was invested in Europe (p.58) – that he coined a special phrase “usury imperialism” for the one and said of the others “in regard to Germany we have a third type” (p.58). Even with regard to British “colonial imperialism” to use Lenin’s phrase, the facts do not fall into place: of the total long-term capital invested abroad, more than half (£1,983 million out of £3,763 million) was held outside the Empire. [35]

It would be as easy to refute the second argument by simply referring to Britain’s growing import bill and shrinking colonial possessions, or to the fact that empire-shorn Germany, more than three fifths as dependent as Britain on imported industrial materials [36] has nothing like three-fifths of Britain’s truncated empire to find them in. But there is more to it than refuting the equation, “feverish-hunt-for-raw-materials” equals “acquisition-of-colonies”. Lenin’s basic equation – “the-more-capitalism-develops” equals “the-more-the-need-for-raw-materials-arises” – is just as wrong to-day. Three major – and unforeseen – developments have occurred since his day. All three are inherent in the system, but their rapid maturation this generation is a product of the war- slump-war drive to autarky. One is the growing efficiency with which raw materials are used and the consequent release from the need to devote a fixed proportion of total resources to their production. It has been estimated officially for the United States that this factor alone was responsible for doubling the value of gross national product from four to eight times that of the input of raw materials consumed in the process in the first half of this century. [37] A second is the spread of industrial techniques to the production of industrial raw materials and the increasing use of “natural” raw materials that lend themselves to industrial exploitation; like oil. Even excluding oil, any random selection will show consumption of raw materials in industrial countries increasing in the same direction as their manufactured content. While the use of crude materials in these countries increased slowly between 1950/52 and 1955/57 as follows: cotton 7 per cent, wool 12 per cent, rubber 15 per cent, jute 17 per cent and copper 20 per cent, consumption of similar processed materials, largely synthetics, rose appreciably faster: steel 31 per cent, woodpulp 33 per cent, synthetic rubber 44 per cent, aluminium 61 per cent, plastic materials 96 per cent and synthetic fibres 211 per cent. [38]

The third change in raw materials supply that has occurred since Lenin’s day, one closely related to the foregoing, and one Lenin explicitly pronounced to be impossible under capitalism [39], has been the tremendous development of agricultural production in developed countries in the West. Despite official discouragement, the average rate of growth in US agricultural production was 2-3 times as fast as the average for all other branches of activity in the 1948-1958 decade [40]; in France, agricultural production rose 14 per cent annually compared with 11 per cent for industrial output between 1953 and 1958 [41]; and in Western Europe generally, the current struggles on agricultural problems within and around the Common Market are a direct outcome of this industrial revolution in agriculture.

One important consequence of these developments is that capital flows that are still continuing are changing their character; from flowing into extractive industries they are being channelled increasingly towards manufacturing industries undertaken directly by the large industrial complexes that have emerged, as has been shown, at the apex of financial power in mature capitalist countries. Take India as an example: while total foreign business investments rose from Rs 2,558 million in mid-1948 to Rs 6,107 million at the end of 1959, or 2.4 times, investment in petroleum refining (and trading) rose from Rs 223 million to Rs 1,207 million or 5.4 times, and investment in manufacturing from Rs. 709 million to Rs 2,507 or 3.5 times. Contrast this with the record of plantation investments – an increase from Rs 525 million to Rs 951 million or 1.8 times – or of mining – a bare increase from Rs 115 million to Rs 130 million or 1.1 times. [42]

Surprisingly, Lenin did not use the strongest evidence of the link between finance capital, capital exports and colonialism available to him, viz. the importance of state and municipal bonds in total foreign investments. Those formed 30 per cent of British foreign investments in 1913 and, if certain~ other government-guaranteed securities were to be included, nearly one-half. [43] Arranged as they were through “finance capital” institutions these colonial stocks constituted the most direct possible investment in empire. They too have all but disappeared. Of the £446 million of Government and municipal loans outstanding to British investors in India and Ceylon in 1938, under £6 million remained by 1951 [44], the rest having been liquidated even before the “liquidation of Empire”.

End of Empire

Taking Lenin’s “last stage” literally, colonial independence and the continuation of capitalism are incompatible. And yet we have both – in increasing quantities. Moreover, opposition to colonial independence, although evident enough in the metropolitan countries and brutal enough overseas, has had in most cases little of the spirit of the “last ditch stand” one would expect from a society fighting for its existence. In the event it has been a relatively feeble opposition, willing to seek and abide by compromise with nationalist movements. There can be little doubt that changes within mature capitalism have had a lot to do with this feebleness. The decline in foreign investment and its change from labour-using extractive industries to more capital-using manufacturing industries reduced the intake of colonial labour precisely when the impact of modern techniques was resulting in explosive increases in the colonial populations and labour forces. The old imperialist investments had probably reached their zenith by the first World War and have since contributed little, if anything, to solving the colonies mounting unemployment problems. In the meantime their stagnation and decline focussed the colonial labour movements’ attacks on foreign rule, and, by negative example, sharpened their demand for an expanding economy and for the political status that might engender it. They found a potent ally in some places, like India, in the local bourgeoisie which hastened to fill the vacuum created and which found its further development hampered by foreign rule.

In its turn, colonial capital drew strength from the new forms of foreign investment. These were geared to the domestic market, interested in its expansion, in finding workers with modern skills and linking up with partners versed in local conditions-interested in fact in economic growth and the politics of growth. Even the falling off of recruitment to expatriate careers as a result of full employment at home was a factor in hastening the transfer of power: it left gaps in the administration and repressive organs of most colonial countries and led to the appointment of colonials to at least some sensitive positions.

Again, the diffusion of industrial capitalism, the decline of the imperialist powers as exporters of cheap consumer staples, together with their restrictive control of the colonies’ foreign trade and economic relations, subjected them to mounting international pressure to relinquish the advantages they held in the colonies. The record is long. On the Allied side alone, it culminated during the Second World War, in the promise to abandon Imperial Preference as a condition of American Lend-Lease, in recurrent American demands for colonial independence as part of the post-war settlement, in a tacit Russo-American alliance to divest the older Allies of their territorial possessions and so on.

Finally, the onset of the Cold War has made of Independence and economic development two giant counters in a global confrontation which deals in social stability as earnestly as in missiles.

These are some of the factors in colonial independence – certainly not all. That they derived to some extent from the change in the locus and forms of accumulation, from the growing importance and changing structure of industry in mature capitalist countries and, ultimately, from the permanent arms economy is clear. It is also clear that they were not foreseen, nor could have been, by Lenin and his generation.

Promise and Postscript

Some of the conclusions entailed in this analysis will be taken up in later issues of International Socialism. There is one general statement that seems in order here, however : if good theory is operational – and this is how it should be – Lenin’s Imperialism was supremely good theory in its day. It picked out the enemy, determined the crucial alliance, and explained what the battle was about. But the lines of battle have been redrawn and Lenin, however superb an example of the right approach to theory, is no more the complete manual.

3. Writing in mid-1961, U.V. Kitzinger stated: “The last three years have also seen a vast crystallization of Franco-German industrial agreements and measures of business integration directly provoked by the Common Market. Peugot and Mercedes-Benz, As de Trefle and Agfa Leverkusen, Fouga and Messerschmidt, Desmarais and BV-Aral, Rhone-Poulenc and Bayer Leverkusen, Centrale de Dynamite and Hoechst, Breguet and Dornier, Lip and Holzer, Lavallette and Bosch, Manurhin and Auto-Union, Nord-Aviation and Focke-Wulf, to mention only some of the more famous names in the aeroplane and motor, chemical and mechanical industries of the two countries, have all concluded various kinds of agreement: for the exchange of patents, for manufacture under licence, for marketing of each other’s products, for the joint manufacture of new products. Much the same kind of activity is going on between French firms and Belgian, Dutch and Italian firms, and almost all the combinations possible between six partners.” (The Challenge of the Common Market, Oxford: Basil Blackwell, 1961, pp.96-7.)

4. About 470 out of about 2 million private concerns in Britain (some 0.0002 per cent) accounted for 48 per cent of all net assets in 1951-2 (From P. Sargant Florence, Ownership, Control and Success of Large Companies, London: Sweet & Maxwell Ltd., 1961, Table ID p.9); more than one-third of the labour force in all industrial activities work in the three largest business units – 87 per cent in cement, 84 per cent in petroleum, 93 per cent in explosives and so on (from Ibid., Table IF, p.16).

10. Gross domestic capital formation fell by a quarter between 1900 and 1913 (although 1913 was the best year since 1907) while net payments abroad rose nearly seven-fold in the same period (James B. Jeffereys and Dorothy Walters, National Income and Expenditure of the United Kingdom, 1870-1952, in Simon Kuznets (ed.), Income and Wealth, Series V. London: Bowes & Bowes, 1955, Table XV, pp.36-7).

17. Notice the relief with which the Chairman of the Chartered Bank, one of the largest of those operating “out East”, greeted the decision to retain a common currency in the area beginning to be known as Malaysia: “It must, therefore, be a matter of satisfaction that the continuance on the same parity basis, of the existing currency arrangements. to put it at the very least, postpones the fragmentation of the unified currency area comprising the Federation, Singapore and the British territories in Borneo, in which first the Straits dollar and subsequently the Malayan dollar have provided a stable and effective medium of exchange.” (Statement at the Annual General Meeting, 1 April 1959)

20. The lower figure is an official estimate for 1953-59 (Assistance from the United Kingdom for Overseas Development, Cmnd 974, March 1960, p.6), the higher is a private estimate for 1956-7 (A.R. Conan, Capital Imports into Sterling Countries, London: Macmillan, 1960, p.84).

21. Between 1885 and 1895, capital exports from Britain averaged some £30 million, and during the following decade-some £40 million (Problems of International Investment, London: RITA, 1938, p.115) or in terms of to-day’s prices, about £100 million annually over the whole period. Only between 1905 and 1913 did they become heavy – some £200 million a year – but even then they did not reach the £150 million mark – roughly the current rate in real terms – until 1910 (C.K. Hobson cited in Conan, op. cit., p.82). Feis (op. cit., pp.14-5) gives lower figures however: £185 million annual average for 1910-1913.

39. He wrote: “It goes without saying that if capitalism could develop agriculture, which to-day lags far behind industry everywhere, if it could raise the standard of living of the masses there could be no talk of a superfluity of capital ... But if capital did these things it would not be capitalism ...” (pp.56-7, Emphasis added).